GASB Proposes Implementation Guide for OPEB Standards

The Governmental Accounting Standards Board (GASB) has issued an Exposure Draft of a proposed Implementation Guide that contains questions and answers about the GASB’s new standards for accounting and financial reporting for postemployment benefits other than pensions. Those benefits (primarily retiree health care) are referred to as other postemployment benefits (OPEB).

The Exposure Draft of Implementation Guide No. 201X-Z, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions (and Certain Issues Related to OPEB Plan Reporting), is available on the GASB website. Stakeholders are encouraged to review and provide comments, the deadline for which is September 25, 2017.

The proposed Implementation Guide provides answers to questions intended to clarify, explain, or elaborate on the requirements of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. The proposal also addresses a limited number of issues related to Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans.

Statement 74, approved in June 2015, replaces GASB Statement No. 43. It addresses the financial reports of defined benefit OPEB plans that are administered through trusts that meet specified criteria. The statement follows the framework for financial reporting of defined benefit OPEB plans in Statement 43 by requiring a statement of fiduciary net position and a statement of changes in fiduciary net position. The statement requires more extensive note disclosures and required supplementary information (RSI) related to the measurement of the OPEB liabilities for which assets have been accumulated, including information about the annual money-weighted rates of return on plan investments. Statement 74 also sets forth note disclosure requirements for defined contribution OPEB plans.

Statement 75 replaces the requirements of GASB Statement No. 45. It requires governments to report a liability on the face of the financial statements for the OPEB that they provide, as follows:

• Governments that are responsible only for OPEB liabilities related to their own employees and that provide OPEB through a defined benefit OPEB plan administered through a trust that meets specified criteria will report a net OPEB liability—the difference between the total OPEB liability and assets accumulated in the trust and restricted to making benefit payments.
• Governments that participate in a cost-sharing OPEB plan that is administered through a trust that meets the specified criteria will report a liability equal to their proportionate share of the collective OPEB liability for all entities participating in the cost-sharing plan.
• Governments that do not provide OPEB through a trust that meets specified criteria will report the total OPEB liability related to their employees.

The questions and answers contained in GASB Implementation Guides constitute Category B authoritative guidance under generally accepted accounting principles (GAAP). The guidance is applicable to all state and local governments that follow GAAP when preparing their financial statements.